Will High Limit Credit Cards Help You Get a Mortgage?

Three years ago (in 2007) right before the real estate bubble burst, I came very close to buying my first home. Fortunately, I decided last minute to not go through with the purchase… it just would have been too much money for my budget. However, during the mortgage pre-qualification process, I did learn a lot about the role credit cards play in determining your creditworthiness.

For starters, the loan officer told me that they generally like to see at least 2 or 3 credit cards with credit limits of $10,000 or more. At the time, I only had one credit card that met that criteria; my Amazon credit card I had since 2005. Long story short, I was still approved for the mortgage, but supposedly it would have been better if I had more credit cards with higher credit limits.

The mortgage officer also told me it’s important to have more than just credit cards on your file. You see, credit cards are revolving debt (meaning the amount owed fluctuates from month to month). In addition, she said it’s good to have installment loans (where you pay a fixed amount each month). Examples of installment loans include those for cars, boats, etc. Since I had paid for my car in full, unfortunately, I never had an installment loan back then.

Conclusion? I need more than just my Amazon credit card. It’s best to have a mixture of high limit cards along with installment loans on your credit record.